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Emerita Resources fast-tracks high-grade zinc in Brazil and Spain

by Greg Klein

Two years of escalating prices and several years of historic work have Emerita Resources TSXV:EMO in an exceptionally sanguine mood. Following December’s oversubscribed $4.24-million cash infusion and last month’s TSXV approval to close the Brazilian acquisition, the company announced a breathtakingly ambitious timeline for its Salobro zinc project. Should all go to a very optimistic plan, the company would advance from updating an historic resource to completing pre-feas and mine permitting within two to three years.

Should success reward optimism, Salobro could reach pre-feasibility next year.

The 1,210-hectare former Vale NYSE:VALE project’s located in southeastern Brazil’s Minas Gerais state, where regional infrastructure includes a zinc smelter, paved roads, rail, water and power.

Salobro comes with an historic, non-43-101 Vale-compiled resource of 8.3 million tonnes averaging 7.12% zinc-equivalent lying at shallow depth and showing expansion potential along strike and down dip. The geology suggests either a Mississippi Valley-type or sedimentary exhalative deposit, Emerita says. A standout among historic intervals assayed 10.39% zinc and 2.13% lead over 13.92 metres.

The acquisition would give Emerita a 75% stake in Salobro and the right to pick up the remaining 25% from IMS Engenharia Mineral Ltda. Vale, meanwhile, has begun the process of withdrawing a civil claim against IMS concerning ownership of the property, Emerita stated. The company expects to close the deal by the end of March.

“Ambitious” might be an understatement for such an optimistic timeline. But the project “has consistently exceeded our expectations during our scoping and analysis phase,” says newly appointed CEO Michael Timmins. The veteran of Agnico Eagle Mines’ (TSX:AEM) expansion from one to nine operations adds, “We are encouraged by the outcome of this early mine study and are very excited to have the opportunity to utilize our award-winning mine-building team in Brazil to fast-track the development of Salobro.”

With that in mind the company foresees a 43-101 technical report filed by the end of March, a 43-101 resource by the end of Q2, 3,500 metres of exploration drilling to begin in early March, a PEA complete by the end of Q3, baseline enviro studies beginning in Q3, a pre-feas finished by Q3 2019 and mine development permits in hand by Q2 2020.

Obviously such an agenda depends on favourable outcomes at every stage. The company has already been resampling historic core for the new resource, which will also include upcoming step-out holes to expand the deposit’s shallow areas. A conceptual mine plan will build on info inherited from Vale.

The deal calls for Emerita to pay Vale an initial US$350,000 after IMS turns Salobro over to a subsidiary held 75% by Emerita and 25% by IMS. Once Vale formally withdraws its claim against IMS, Emerita pays Vale legal costs of approximately 760,000 reals, about C$297,000. Further payments to Vale would cost Emerita US$1.65 million by July 14, US$1.5 million in 2020 and another US$3 million in 2024.

Emerita may buy out the IMS 25% for C$2 million and a million shares by 2021.

Helping on the financial side will be December’s oversubscribed $4.24-million private placement. But some of that cash will go to another Emerita zinc project—and for that, the focus shifts to northern Spain.

Situated next to the former Reocin mine that produced about 62 million tonnes averaging 11% zinc and 1.4% lead up to 2003, the 3,600-hectare Plaza Norte property sits amid regional infrastructure including rail, road and port facilities, along with a Glencore zinc smelter about 180 road kilometres away. The project is a 50/50 JV with the Aldesa Group, a specialized construction and infrastructure firm operating in Spain and internationally.

Emerita’s Spanish team now has permitting underway for a 5,000-metre campaign anticipated to start in May. The plan is to build a 43-101 resource over an area that’s already seen more than 300 holes totalling about 73,000 metres. Some historic intercepts include 9.72% zinc and 0.09% lead over 18.96 metres, along with 7.05% zinc and 0.3% lead over 8.2 metres. The company anticipates an initial resource in Q1 next year and a PEA by 2019 year-end.

In a remote corner of Canada’s north lies the Yukon—a territory that is renowned for both its legendary mineral potential and its storied mining history.

But while the Yukon only produced 2.2% of Canada’s gold in 2016, the territory’s considerable potential may finally be getting realized in a big way. In the last few years globally significant discoveries have been made and now mining giants such as Barrick Gold TSX:ABX, Goldcorp TSX:G and Agnico Eagle TSX:AEM are making their moves into the Yukon to get in on the action.

A coming of age story

This infographic comes from Strikepoint Gold TSXV:SKP and it showcases some of the reasons why the most important chapter in the Yukon’s mining story may just be beginning.

Although the Yukon has been known for a long time to possess incredible mineral potential, it is only in the last few years that signs have been pointing towards this being realized in the form of globally significant discoveries, investment from major players and mines being built.

A new era in the Yukon

For gold to be produced, it must first be discovered. The Yukon has been home to some of Canada’s most exciting discoveries in the last 10 years. The new project pipeline contains impressive deposits but, even more importantly, it contains some impressive names.

White Gold

Famously found by prospector Shawn Ryan and Underworld Resources in 2008, the White Gold discovery triggered much of the modern interest in the Yukon. Kinross Gold TSX:K purchased Underworld Resources for $139.2 million at the height of the gold market. More recently, major Agnico Eagle has bought into the district for $14.52 million.

Coffee project

Discovered in 2010, this project is just kilometres away from the White Gold project. It too is based on Shawn Ryan’s claims. Most recently, Goldcorp bought the project for $520 million through its acquisition of Kaminak Gold.

Casino project

Currently under environmental review, this massive porphyry deposit owned by Western Copper and Gold TSX:WRN could be the largest mine in Yukon history, if constructed. Right now the deposit has reserves of 4.5 billion pounds of copper and 8.9 million ounces of gold.

Rackla

The only Carlin-style district in Canada, this project is being advanced by ATAC Resources TSXV:ATC. Recently ATAC generated headlines with an investment from Barrick, which put in $8.3 million while also committing up to a further $55 million to earn 70% of the property’s Orion project.

Eagle Gold

Eagle Gold is on track to become the Yukon’s largest gold-only mine in history. Victoria Gold TSXV:VIT, the project’s owner, expects its first gold pour in 2019. Currently the property’s Eagle and Olive deposits have 2.66 million ounces of gold in reserves.

Major arrivals

In the last year or so some of the world’s most prolific gold miners such as Barrick, Goldcorp and Agnico Eagle have set up shop in the Yukon—and it could be a sign that the territory is close to reaching its ultimate potential as a top-tier mining destination.

Here are some of the other reasons that miners and investors are looking northwards:

1. Government support

The Yukon government is well known for supporting prospectors and miners developing projects. Current programs include the Yukon Mineral Exploration Program, which provides a portion of risk capital to help explorers locate and grow deposits, as well as the Fuel Tax Exemption, which makes miners and other off-road industries exempt from fuel taxes.

2. A rich mining history

From the placer mining of the famous Klondike gold rush to the mining today in the Yukon, the territory has always welcomed mining. In fact, mining is still the most important private industry today in the Yukon by GDP share (19%).

3. First Nations approach

First Nations and the Yukon government have recently championed a new “government-to-government” relationship to ensure that industry, the territorial government and First Nations are on the same page for mineral projects.

4. Momentum

From Shawn Ryan’s discoveries to the arrival of majors in the region, it has been an eventful decade for Yukon miners. Many expect the best is yet to come.

An additional 66,047 hectares brings Dunnedin Ventures’ (TSXV:DVI) Kahuna property to around 1,200 square kilometres, the company announced December 7. Acquired by staking, the ground now holds over 100 interpreted kimberlite targets, half of them already under scrutiny for diamond indicator minerals from till sampling. Drilling has confirmed 10 diamond-bearing dykes.

A macrodiamond from Kahuna’s PST kimberlite.

Till sampling has found anomalous gold in five metasedimentary belts, while drilling has found gold in an extension of the Aqpik and Aklak gold showings on Agnico Eagle Mines’ (TSX:AEM) adjacent, advanced-stage Meliadine project, Dunnedin stated. An all-season road links Meliadine with the Hudson Bay hamlet of Rankin Inlet.

While processing material from 1,100 till samples collected last summer, Dunnedin anticipates a 2017 program of drilling to test potential extensions of the resources, compile a 1,000-carat parcel for evaluation in Antwerp and try new targets identified by indicator minerals.

Having poured about $23 million into Nunavut so far, Peregrine Diamonds TSX:PGD plans to spend another $15.5 million to $17 million next year on its Chidliak project, the Nunatsiaq News reported November 25. Most of the $23 million went to Iqaluit, home to an estimated 7,590 people. “It will cost between $50 and $75 million to go from here to where we need to get to,” the journal quoted president/CEO Tom Peregoodoff.

Chidliak would have a 10-year lifespan, according to last summer’s PEA.

The Baffin Island project reached PEA in July, calling for a capex of $434.9 million, an amount relatively modest for an isolated operation but considerable for a territory of about 37,082 people. The company hopes to reach feasibility by H2 2019, complete permitting by the end of that year and begin construction in H2 2019. Should hopes, financing and feasibility fall into place, Peregrine might be digging diamonds by 2021.

Brothers Robert and Eric Friedland own about 25% and 21% of the company respectively.

New infrastructure would include an all-season road to Iqaluit, about 120 kilometres southwest. The government of Nunavut hopes to have an $85-million deep sea port built there by 2020.

The territory currently has two other mines in production, Agnico Eagle’s (TSX:AEM) Meadowbank gold mine about 300 kilometres west of Hudson Bay and Baffinland Iron Mines’ Mary River iron ore operation roughly 800 kilometres north of Chidliak. Baffinland trucks ore to its own port, 100 kilometres north of the mine.

Peregoodoff said the company has yet to negotiate an Inuit Impact and Benefits Agreement, but stated such a deal would probably resemble agreements signed with Northwest Territories diamond producers, the News added.

Should Peregrine meet its goal, Chidliak wouldn’t be Nunavut’s first diamond operation. Just across the border from the NWT’s Lac de Gras camp, Nunavut’s Jericho mine produced gems between 2006 and 2008. Shear Minerals gave up on its restart attempt in 2012, leaving taxpayers with a large part of an estimated $10.5-million clean-up bill.

Yet diamond mining transformed the NWT economy. According to figures supplied by the NWT and Nunavut Chamber of Mines, between 1996 and 2015 the industry provided over 50,000 person-years of employment, 49% northern and 24% aboriginal. By far the territory’s largest private sector industry, diamond mining created 29% of the NWT’s GDP in 2014. Direct and indirect benefits bring the number up to 40%, according to chamber data.

“One area of strong gold-in-till concentration occurs at the 10-square-kilometre hinge domain of a previously untested folded metasediment belt where a number of diamond-bearing kimberlites including PST, Notch and 07KD-24 are also located, suggesting proximal bedrock sources of gold and diamonds,” the company added.

Previous analysis of the till samples revealed diamond indicator minerals suggesting potential extensions to Kahuna’s known kimberlites, as well as additional kimberlite targets prospective for diamonds.

Historic work included 97 rock samples that assayed between 0.05 and 2.52 g/t gold.

The 60,000-hectare property sits about 25 kilometres from the Hudson Bay hamlet of Rankin Inlet and about 10 kilometres from Agnico Eagle Mines’ (TSX:AEM) Meliadine gold project, which could potentially begin production in 2020. An all-season trail under construction from Rankin Inlet to another Hudson Bay hamlet, Chesterfield Inlet, would pass within a few kilometres of Kahuna. Dunnedin has pledged $25,000 to the project. Longer-term plans would include a link to the current all-season road to Meliadine.

Kahuna has a January 2015 inferred resource for near-surface diamond deposits on the Notch and Kahuna kimberlites, 12 kilometres apart:

Encouraged by last year’s success, Dunnedin Ventures TSXV:DVI expanded both its till sampling program and property size at the Kahuna diamond project in Nunavut. On October 4 the company announced completion of 1,111 till samples, approximately 10 times the amount taken in 2015. Dunnedin also staked another 25,000 hectares, bringing the property size to around 60,000 hectares and its border within about 10 kilometres of Meliadine, where Agnico Eagle Mines TSX:AEM sees gold production potentially starting in 2020.

Some diamonds from the Notch kimberlite between 0.6 and 0.85 millimetres.

“Last year’s program effectively identified several new potentially diamond-bearing kimberlite pipe and dyke targets,” commented CEO Chris Taylor. “The much larger 2016 program was implemented to expand upon existing diamond indicator mineral trains and to identify additional prospective diamond sources through testing the down-ice mineral signatures of geophysically interpreted kimberlite pipes and dykes across the property.”

Dunnedin uses sampling techniques and proprietary mineral chemistry filters pioneered by company adviser Charles Fipke at his Ekati discovery. Additionally, samples from the previous year are being re-examined for possible gold content.

Meanwhile work continues on diamond recoveries from mini-bulk samples taken last year at the project’s PST and Kahuna kimberlites. Early last month the company reported that a 2.32-tonne sample from the Notch kimberlite revealed 85 commercial-sized stones totalling 1.95 carats.

With processing of a 2.4-tonne sample about 40% complete, 36 commercial-sized diamonds have been recovered so far from Dunnedin Ventures’ (TSXV:DVI) Notch kimberlite. Lab work for the Kahuna project in Nunavut found 278 diamonds above 0.425 millimetres, with three dozen over 0.85 mm, the company reported March 21. The commercial-sized stones totalled 0.66 carats, with the three largest weighing 0.1, 0.08 and 0.05 carats respectively.

CEO Chris Taylor described the results as “an attractive diamond population with most stones being clear and colourless variants of octahedra.”

An 820-kilogram sample reported last November from the PST kimberlite showed 526 diamonds, 96 of them commercial-sized stones totalling 5.34 carats. The sample grade came to 6.5 carats per tonne. The 13,000-hectare project holds eight diamondiferous kimberlites.

A January 2015 inferred resource for the Kahuna and Notch dykes, 12 kilometres apart, provided numbers for two sieve sizes over 0.85 mm.

The stones’ value can’t be estimated until a parcel is sent to Antwerp.

Before the lab returns to the bulk sample, Dunnedin plans to have last year’s till samples processed to guide exploration on Notch and PST. Processing would then resume on the remaining 1.4 tonnes of Notch kimberlite, plus additional kimberlite from PST and other targets.

The Kahuna project lies about 25 kilometres from the hamlet of Rankin Inlet. An all-weather road to Agnico Eagle’s (TSX:AEM) Meliadine development project covers about half that distance.

Just the first bulk sample released by Dunnedin Ventures TSXV:DVI, it shows “some of the best diamond results reported in Canada,” declared CEO Chris Taylor. The November 12 announcement distinguished the Kahuna project in Nunavut as “having kimberlites with both high grades and large diamonds.” That would seem especially auspicious following the company’s first field season. But this is a project with a history, in a region that saw roughly $25 million of past exploration. And it’s getting some help from the dean of Canadian diamond exploration, Chuck Fipke.

“This is not grassroots,” Taylor emphasizes. “We know the diamonds are there. We just have to add to those we’ve found.”

Dunnedin signed a four-year, 100% option on the property in November last year “after a lot of tire-kicking,” Taylor says. A former Imperial Metals TSX:III geologist who moved into the juniors about six years ago, he was attracted to diamonds as “the only real bright spot I could see in resources over the last couple of years.”

There was a family connection too. His Flemish great-grandfather imported diamonds into Belgium, where he had “about 100 guys cutting stones for him.” Taylor has family business heirlooms decorating his office, some from his grandfather, who worked with gems in this country.

A “contact of a contact” knew people at De Beers, where a geologist pointed Dunnedin to Kahuna.

The project, about 25 kilometres from the hamlet of Rankin Inlet on Hudson Bay’s northwestern shore, had previously been part of a regional program that included radar, airborne magnetics and electromagnetics, and ground-based EM surveys. Over 10,000 till samples revealed approximately 20,000 indicator minerals.

But the Kahuna claims lapsed after the last operators left, Stornoway Diamond TSX:SWY to focus on Renard and Shear Diamonds to tackle the ill-fated Jericho project, Taylor says. Vendors re-staked the claims and signed the option with Dunnedin late last year.

Besides finding kimberlite pipes, past explorers “found this series of kimberlite dykes, which is what our project is based around, and realized these were the sources of the indicator minerals. When they popped holes in them, they realized they had good diamond grades,” relates Taylor.

“When we looked at the bulk sample data, there seemed to be enough work done to do an initial resource, which is what we ended up publishing earlier this year.”

Announced in January, the inferred resource for the Kahuna and Notch dykes, 12 kilometres apart, provided figures for two sieve sizes over 0.85 millimetres, considered commercial sizes.

The two kimberlites are exposed at surface and remain open along strike and at depth. The project holds six other diamondiferous kimberlites, four of them between Notch and the PST dyke, location of the November 12 results.

“He’s an old school friend of one of our directors, Pat McAndless, and the first person I went to when we started on diamonds,” Taylor says. “Chuck’s a very open, genuine guy. He showed me some of the methods they used to make the discovery at Ekati, the characteristics of diamond deposits. It provided guidance for me to find a project that our company could work with.” An adviser to the company since July, Fipke’s “guiding us on the ongoing sample processing and exploration methods, and we’re using his lab.”

Fipke’s CF Mineral Research has developed unique methods of diamond recovery, Taylor says, accounting for dramatic improvement. Also, Fipke “can recover all the indicator minerals at the same time, which is a helluva bonus. Usually, if you do caustic fusion, which is how most companies get their diamonds out of the rocks, you destroy all the minerals that came up in that kimberlite. But we can use them to hone in on our exploration.”

Chad Ulansky, Fipke’s “right-hand man in diamond exploration,” accompanied Dunnedin’s first field season last summer. The company has its own expertise too in McAndless, recently retired as VP of exploration for Imperial Metals, and his near-namesake Tom McCandless, Dunnedin’s technical adviser. With diamond experience in Africa, Europe and the Americas, McCandless took part in the discovery and assessment of Stornoway’s Renard kimberlites and in earlier work at the Kahuna project.

Still to come are sample results for over three tonnes taken from the Notch and Kahuna dykes as well as other targets. Another 180 concentrated till samples from last summer also remain to be processed, which Taylor hopes will point to additional targets.

There’s a real efficiency in getting those diamonds because of the high grade and the location near town. It’s not going to cost us anything near what it costs other companies to do bulk samples.—Chris Taylor,CEO of Dunnedin Ventures

But the big question remains: What are the diamonds worth? For that, Taylor would have to send a 1,000-carat package to his family’s former city of Antwerp for evaluation. The resource estimate noted a 2008 description of Kahuna diamonds “as having encouraging value characteristics, with a high abundance of colourless and near-colourless varieties with octahedral shapes being the dominant morphology.”

The PST sample reported November 12 included “an octahedral crystal weighing 0.77 carats and a polycrystalline diamond weighing 2.22 carats. A preliminary examination of the diamonds suggests approximately 50% to 60% are clear and colourless.”

In his previous work McCandless reassembled a 13.42-carat Kahuna diamond that “blew up in a jaw crusher,” Taylor says, leaving fragments as big as 5.43 carats.

Aiding the economics of the 13,000-hectare project is Meliadine, where Agnico Eagle TSX:AEM has underground development underway. An all-weather road linking the site to Rankin Inlet covers about half the 25 kilometres from the hamlet to Kahuna.

“There’s a real efficiency in getting those diamonds because of the high grade and the location near town,” Taylor maintains. “It’s not going to cost us anything near what it costs other companies to do bulk samples.”

Dunnedin has just closed a $158,000 first tranche of a $1.1-million private placement offered in August. Fipke stated his intention to participate.

The company has also held its first consultations with the Kivalliq Inuit Association. “It’s really nice to work with a community that’s knowledgeable,” Taylor says, pointing out that Rankin Inlet began as a nickel mining town and now has Meliadine 25 kilometres away. “They know how to work with mining companies, what the KIA can bring to the table and what the company can bring to the table.”

With a Canadian federal election call anticipated any day now, cynics are calling the Conservative government spending announcements “Christmas in July.” But one potential miner welcomes the plan to build a deep water port in the Nunavut capital of Iqaluit. Following the July 30 announcement by Nunavut MP and Minister of the Environment Leona Aglukkaq, Peregrine Diamonds TSX:PGD noted the Baffin Island facility would “dramatically” improve efficiency and costs for its flagship Chidliak project, 120 kilometres north. The company has a preliminary economic assessment planned for next year.

Although a deep sea port at Iqaluit would serve Baffin Island, this map shows most of Nunavut’s advanced stage projects located on the mainland. (Image: NWT and Nunavut Chamber of Mines)

While Baffin Island’s only operating mine already has its own port, most Nunavut projects are on the mainland. Baffinland Iron Mines trucks iron ore from its Mary River mine to Milne Inlet, 100 kilometres away. The Nunavut Impact Review Board is currently reviewing Baffinland’s application to expand shipping from three summer months to 10 months a year.

As is the case for most of the territory’s exploration and development projects, Nunavut’s other mine sits on the mainland. Agnico Eagle’s (TSX:AEM) largest gold producer, Meadowbank, links to the hamlet of Baker Lake via an all-weather, 110-kilometre road. The mine “depends on the annual, warm-weather sealift by barge from Hudson Bay to Baker Lake for transportation of bulk supplies and heavy equipment,” the company states.

The feds offer to pay 75% of the Iqaluit port’s estimated $84.9-million price tag. The deal depends on the territorial government funding the rest, environmental approvals and, judging by her remarks, Aglukkaq’s re-election.

“What I can say is that if I’m re-elected, I’m going to make sure that the funding remains here,” the CBC quoted her. “And I’ve committed to it, I’ve announced it today, and that it is my commitment to delivering on this project.”